current assets investment policy calgary company is thinking of modifying its curren 1550111

CURRENT ASSETS INVESTMENT POLICY Calgary Company is thinking of modifying its current assets investment policy. Fixed assets are $600,000, sales are projected at $3 million, the EBIT/Sales ratio is projected at 15%, the interest rate is 10% on all debt, the federal-plusstate tax rate is 40%, and Calgary plans to maintain a 50% debt-to-assets ratio. Three alternative current assets investment policies are under consideration: 40%, 50%, and 60%

of projected sales. What is the expected return on equity under each alternative?